With the end of the Paycheck Protection Program on May 31, 2021, a number of small business owners have been asking and thinking about other U. S. Small Business Administration (SBA) loan programs, and it is perhaps a propitious moment to remember why SBA loans are so attractive to small business owners, how they reduce lender risk, and why that is beneficial for a loan applicant.   

Robert Blaney

Generally speaking, SBA-guaranteed loans are attractive to small business owners because they have longer terms and lower down payment requirements than conventional loan products.  Further, SBA-guaranteed loans have capped interest rates and no balloon payments.  The loans are made through a private lender and then guaranteed by the SBA.  That guarantee lowers the lender’s risk which allows them to approve borrowers where they may not have been able to extend credit otherwise.  

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